The Federal District Court of Oregon has ruled that under
recently amended Federal Rule of Evidence (FRE) 502, the
attorney-client privilege was waived when privileged materials were
produced because of the disclosing party's careless privilege
review. Relion, Inc. v. Hydra Fuel Cell Corp., 2009 WL
5122828 (D. Or. 2008).
In preparation for opposing counsel's inspection and copying
of documents at Relion's offices, Relion's attorneys
reviewed the requested documents to remove attorney-client and work
product materials. Following the inspection, Hydra's counsel
provided Relion with a complete hard copy set of the documents
Hydra selected and copied off-site, and provided Relion's
outside counsel with electronic, text-searchable copies of the
Four months following the inspection, Relion's counsel
received a letter from Hydra's counsel that discussed two
privileged emails that Hydra had copied during the document
inspection. In response to the letter, Relion's counsel
asserted that the two emails were privileged. A subsequent review
by Relion's counsel of Relion's files determined that the
emails had been inadvertently left among the documents provided to
Hydra for inspection. Relion moved to have the emails returned
pursuant to an existing protective order.
The district court relied on newly amended FRE 502 to hold that
Relion had waived the attorney-client privilege protecting the two
emails — specifically FRE 502(b)(2), which establishes
that an inadvertent production of privilege material will not
constitute waiver if "the holder of the privilege or
protection took reasonable steps to prevent disclosure."
According to the court, Relion had three opportunities to identify,
remove, and protect the two privileged emails: the pre-inspection
privilege review, the post-inspection hard copy production to
Relion by Hydra, and the post-inspection production to Relion's
outside counsel of electronic, searchable copies of the selected
documents. Relion's failure to identify and remove the two
privileged emails during these three opportunities led the court to
hold that Relion had fallen short of its FRE 502(b)(2) duty.
The Relion decision gives notice that as part of their
FRE 502 analysis, courts will be scrutinizing attorneys'
privilege review procedures. Relion also makes clear that
whether an attorney (or privilege holder) re-reviews
produced materials after production to identify
inadvertently produced privileged materials will bear on not just
the FRE 502(b)(3) question (rectifying inadvertent disclosure), but
also the FRE 502(b)(2) question of whether the privilege holder
took reasonable steps to protect the privileged material.
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Several interrelated legal developments make it more important than ever for religious institutions intending to qualify for exemptions to generally applicable laws to do the hard work before litigation or administrative inquiry of considering what their religious beliefs mean for their governance structure, employment relations and delivery of services.